Wednesday, April 08, 2009

EDITORIAL >> Tax code left standing

It is a small miracle that Arkansas has a tax code at all, much less one that provides people with a modest level of services at a cost most of them find affordable. The legislature will adjourn in a few days after having done only negligible harm to the tax system. The lawmakers seemed propelled last week toward serious destruction.

The House of Representatives passed a rash of bills to reduce or eliminate taxes on a variety of special interests, notably investors, but Gov. Beebe got the bills stopped in the Senate Revenue and Taxation Committee. His finance men told the committee that the tax cuts would wreck his carefully constructed budget, which may collapse on its own from the weight of economic blight. He is counting on the carryover surplus from good times to pay for schools, colleges, prisons and public health services the next two years while the state lowers its taxes.

Beebe asked the legislature at the beginning to reduce the sales tax on groceries another penny so that he could keep his campaign promise in 2006 to phase out the tax over time. The sales tax cut is a modest help to most families though not much to the poor, whose federally subsidized nutrition is tax exempt. Manufacturing companies insisted on their biennial tax break, this time a reduction in sales taxes on the energy they use, and the governor acquiesced but said no more.

Comfortable apparently that Beebe would veto any other tax breaks they passed and save them from their folly, representatives whooped through a half-dozen tax cuts last week and sent them to the Senate. They can tell a number of business interests, including investors who trade property, “I voted to cut your taxes.” The beneficiaries will be suitably grateful for the gesture when it is time to raise campaign money.

But one of the bills that was trapped in the Senate Monday actually deserved passage, the only one that would correct an injustice in the tax code. It was HB 1378 by Rep. Allen Maxwell, D-Monticello, which would fix an error the legislature committed when it adjusted the income levels at which low-income people would have to pay income taxes. The bill would correct the law so that single heads of households with two or more children would not pay income taxes if their gross earnings were less than $17,200. It would provide about $3 million in relief to people who surely need it the most, mainly single mothers working at minimum wage. The mother of two or more earning up to $21,300 could claim a small tax credit.

If you are keen on providing real help to those who are struggling and not on scouring for campaign help in the next election, here is a way to do it. Tyson Foods would get by nicely if it had to continue paying a sales tax on its fuel and most of us if we had to pay 3 cents on the dollar instead of 2 on the grocery bill, but the extra change in the weekly check of a single mother working for minimum wage might make a difference in the lives of her brood. Governor Beebe should make an exception to his no-more rule and invite the Senate to send him the bill.